RISK FACTORS 4 We are currently advancing our product candidates through our current shareholders. To the extent that additional capital is preclinical and clinical development. Developing product raised through a debt offering, the incurrence of indebtedness candidates is expensive, lengthy and risky, and we expect our would result in increased fixed payment obligations, and we may expenses to increase in connection with our ongoing activities, be required to agree to certain restrictive covenants, such as particularly as we continue the research and development of, limitations on our ability to incur additional debt, limitations on initiate further clinical trials of and seek marketing approval for, our ability to acquire, sell or license intellectual property rights our product candidates. Our expenses could increase beyond our and other operating restrictions that could adversely impact current expectations, depending on: our ability to conduct our business. We could also be required to • the scope, progress, results and costs of drug discovery, seek funds through arrangements with collaborative partners or laboratory testing, preclinical development and clinical trials otherwise at an earlier stage than otherwise would be desirable, for our product candidates; and we may be required to relinquish rights to some of our • the costs, timing and outcome of regulatory review of our technologies or product candidates or otherwise agree to terms product candidates, including, in particular, if we are required by unfavorable to us. the U.S. Food and Drug Administration, or FDA, the European We may be forced to repay conditional advances prematurely if Medicines Agency, or EMA, or other regulatory agencies to we fail to comply with our contractual obligations under certain perform clinical trials and other studies in addition to those that innovation grant agreements. we currently anticipate; Since inception through December 31, 2017, we have received • the costs of future activities, including product sales, medical €865 K in non-refundable grants and €2.96 million in conditional affairs, marketing, manufacturing and distribution, for any advances from Bpifrance Financement. If we fail to comply with of our product candidates for which we receive marketing our contractual obligations under the applicable innovation grant approval; agreements, we could be forced to repay the conditional advances • pricing and reimbursement levels for commercial sale of our ahead of schedule. Such premature repayment could adversely products and the amount of any revenues we would receive affect our ability to finance our research and development from such sales; and projects, in which case we would need to locate alternative • the costs of preparing, filing and prosecuting patent applications, sources of capital, which may not be available on commercially maintaining and enforcing our intellectual property rights and reasonable terms or at all. defending intellectual property-related claims. Furthermore, with our listing on Euronext Paris, we have incurred additional costs associated with operating as a public company. 4.2 RISKS RELATED TO THE DISCOVERY AND Until such time that we can generate substantial revenue from DEVELOPMENT OF AND OBTAINING product sales, we expect to finance our operating activities REGULATORY APPROVAL FOR OUR PRODUCT through a combination of our existing liquidity sources and the CANDIDATES proceeds of any future financings. If we are unable to generate revenue from product sales, in particular from GS010, within our Our product candidates are based on novel technologies, including expected timeframes, or if our expenses increase to a level or at gene therapy, which may implicate ethical, social and legal concerns a rate beyond our expectations, we will need to raise additional about genetic testing and genetic research in general, and such capital. However, we may be unable to raise additional funds or novel technologies make it difficult to predict the timing and costs enter into other funding arrangements when needed on favorable of development of new and unforeseen regulatory requirements terms, or at al l. If we are unable to raise capital when needed and of subsequently obtaining regulatory approval. or on attractive terms, we would be forced to delay, reduce or We have concentrated our research and development efforts on eliminate certain of our research and development programs. Any gene therapy approaches using our core platform technologies, additional fundraising efforts may divert our management from mitochondrial targeting sequence, or MTS, and optogenetics, their day-to-day activities, which may adversely affect our ability and our future success depends on our successful development to develop and commercialize our product candidates. of viable product candidates. We may experience problems To the extent that additional capital is raised through the sale or delays in developing GS010, GS030, or any other new of equity or equity-linked securities, the issuance of those product candidates, and such problems or delays may result in securities could result in substantial dilution for our current unanticipated costs, and there can be no assurance that any such shareholders and the terms may include liquidation or other development problems can be solved. We also may experience preferences that adversely affect the holdings or the rights of unanticipated problems or delays in developing a sustainable, 20 – GENSIGHT BIOLOGICS – 2017 Registration Document